Marina Jack's owner ordered to pay taxes

A settlement includes a "negotiated" assessed value and, in essence, still gives the company a 50 percent break on its taxes.

By J. DAVID McSWANE and DOUG SWORD

Marina Jack's parent company, which has avoided paying taxes on its bayfront property for more than two decades, has agreed to pay half the value of future tax bills and $250,000 in back taxes.

Sarasota County Property Appraiser Bill Furst is calling the settlement a victory because now Jack Graham Inc. will pay hundreds of thousands of dollars in new taxes that will go to cash-strapped schools and local governments.

"I'm glad its over and we prevailed," Furst said of the suit that has dragged on for about two years.

But the settlement includes a "negotiated" assessed value and, in essence, still gives Jack Graham Inc. a 50 percent break on its taxes.

Due to a rare court victory in the late 1980s, Jack Graham Inc. was deemed exempt from property taxes. That ruling came about because of a lease dating back to the 1960s that deemed the company's operation of the bayfront a public good for the city.

That exemption is outdated, said Furst and other critics who have argued that the company should pay taxes for the land, which is still owned by the city.

Those tensions were fueled further by a lease the city signed with the company in 2009, which rented the bayfront to the company for 3 percent of what it earns each year — a lease critics have called a "sweetheart deal."

"That is awesome," said Ken DeLacy, a local resident who has urged local officials to tax the company.

DeLacy said he would like to see the company pay 100 percent of its tax bill, but added, "I think something is better than nothing."

Because Sarasota is the landlord for the property, the city was included in the suit Jack Graham Inc. filed against Furst in 2010 after he slapped the company with a $1.5 million bill.

"The city had been joined to suit, I thought, unnecessarily," said City Attorney Robert Fournier. "I tried to keep the city's involvement in the suit minimal."

In short, the city was compelled to help the company in its fight to avoid paying taxes even though a Jack Graham loss in court would bring more money to city coffers.

If you take the assessed value of the property as of 2010 and assume the property had been going up in value 5 percent a year before that, the tax savings quickly mount up.

Looking at the dozen years that preceded this agreement — 1998 to 2009 — Marina Jack got a $2.1 million tax break.

But that estimate assumes the popular establishment would have paid all of its taxes.

If this 50-percent tax break agreement had been in place during those 12 years, Marina Jack's taxes would have totaled $1.05 million.

The city's share of those abated taxes would have been a little under 20 percent, and Sarasota County Schools' share would have been about 40 percent.

Furst said that is what this fight was about — making Jack Graham pay taxes instead of making others pay more in taxes to make up the difference.

Downtown restaurant Mattison's City Grille, for instance, rents its land from the city but still pays taxes on the property.

And Jack Graham pays property taxes on its bayfront restaurant, O'Leary's, which is next to the marina.

Furst said the settlement is down the middle, meaning both parties gave up something.

"Is it where I'd want it to be? No," Furst said. "Is it where Bob Soran wants it to be? No."

Furst said that as soon as Judge Thomas Gallen signs the settlement agreement, his office will send Jack Graham the past tax bills that are part of the agreement. Those will cover 2010 and 2011 taxes and amount to about $241,000, he said.

While tax rates have not been set for the November 2012 tax bill, Furst estimates that Marina Jack's bill will be $132,000.

In all, the city, county, schools and other taxing authorities will collect about $373,000 from Soran's business by the end of the year.

Furst has been criticized for spending upward of $250,000 in legal bills on the case, but he points out that amount will be more than recouped by year's end.

Furst also suggested that in future years, the assessed value of the marina could go up, maybe even by the 10 percent a year state law allows.

At the beginning of 2013, Florida property appraisers will set new assessed values for the coming tax year. Furst said that other "undervalued" commercial properties in the county have increased by the full 10 percent a year.